Canada Unemployment Rate Ticks Down

The Canadian labour market with terms of its Canada unemployment rate has exceeded many economists’ expectations in September. This means that it has been adding more than twice as many jobs as the previous month. This lead to the Canada unemployment rate being ticked to the extreme lower point. However, if one goes into digging it deeper especially into the numbers then it shows that the rate of employment remains a concern, analysts say.

As per the reports of Statistics Canada which were reported on Friday, it stated that the economy added 47,000 jobs in September. This was while the Canada unemployment rate declined for the first time since January to 6.5 percent. Along with it, the full-time employment also saw its largest gain since May 2022. Along with it, the overall job gains followed four consecutive months of little change. This was recorded as per what the agency said.

Along with it, the job market numbers can be volatile month to month. They also do not provide a full picture of the economy. However, they are still positive to see the unemployment rate tick down. This was recorded as per what the BMO chief economist Doug Porter had told regarding rthe Canada unemployment rate.

“The unemployment rate in the past year or so has been on a one-way street higher,” Porter said. “The fact that the unemployment rate is down a bit is encouraging.”

Canada Unemployment Rate: What Else Was Stated?

The jobs increase suggests the economy might be picking up a little after a “pretty tough summer,” he said, with full-time employment soaring.

But many analysts pointed out that the overall market news was “mixed,” with Katherine Judge, an economist at CIBC, stating in a note that “the headline masked some weaker details.”

“Total hours worked decreased by 0.4 (percent), while the employment rate fell by a tick.”

However, if one is to go on looking at the broader trend, the unemployment rate has been steadily climbing over the past year and a half. This has also led to a hit of around 6.6 percent in August. It was also recorded that the inflation in the other month was around two percent.

This was recorded to be the lowest level in more than three years, as the lower gas prices helped it hit the Bank of Canada’s inflation target. Furthermore, the central bank has also cut its key interest rate three times this year. Along with it, it is widely expected to keep cutting, as the rate of inflation has subsided and the broader trend points to a weakening in the labour market.

Canada Unemployment Rate: Decoding The Rate of Participation

The Canada unemployment rate, despite the job gains in September were driven by youth and women aged 25 to 54. The employment rate was lower in the month and it reflected continued growth in Canada’s population. Statistics Canada said since the employment rate saw its most recent peak at 62.4 percent in January and February 2023.

It has also been following a downward trend, as population growth has outpaced employment growth. On a year-over-year basis, employment was up by 1.5 percent in September. This is while the population aged 15 and older in the Labour Force Survey grew 3.6 percent. However, the participation rate dropped in September. This was recorded to be the third decline in four months and a continuation of a downward trend seen since late 2023.

Furthermore, average hourly wages among employees are also growing at a slower rate. In this, the wages rose to about 4.6 percent year-over-year to $35.59. This was recorded to be a major slowdown from the five percent increase in August. Plus, the unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September. This was recorded to be significantly higher than the unemployment rate for people who were not racialized and not Indigenous.

Plus, the Black Canadians in that age group saw their unemployment rate rise to 11 percent last month. This was recorded while for South Asian Canadians it was 7.3 percent. For those who are non-racialized, non-Indigenous people, it rose to 4.4 percent.

Canada Unemployment Rate: What Else Is Expected?

With regards to the Canada unemployment rate, the numbers on Friday mark the final data release on the state of the labour market. This was done before the Bank of Canada’s next interest rate decision on Oct. 23. However, nothing in this report has swayed predictions of further cuts, experts say.

“The debate in the market is whether the bank in fact should cut by half a point later this month or a quarter point,” Porter said.

Leslie Preston, managing director and senior economist at TD, said its forecast is unchanged at a quarter of a point.

“I think the Bank of Canada would need to see a more rapid worsening in Canada’s economic outlook to move to a [50-basis-point cut],” Preston said.

However, not everyone agrees. This is because the RBC assistant chief economist Nathan Janzen wrote in a note on Friday that the bank’s forecast is for a half-percentage-point cut in October and another in December.

“Details behind the September job numbers were far more mixed than the headline employment and Canada unemployment rate readings alone would imply,” he wrote.